Volkswagen AG reached terms with Porsche SE to acquire a controlling stake in the iconic sports carmaker. The Persian Gulf State of Qatar is also part of the deal in a new VW-Porsche company, walking away with 10% of Porsche, as well as stock options Porsche holds in VW, with an eventual share in the company of 20%.
Volkswagen will pay about 3.3 billion euros, or $4.7 billion, for a 42-percent stake in Porsche’s automotive unit as part of a plan for the gradual merger of the two manufacturers.
The deal brings an end to Porsche’s long-held independence, which has for years been part of the image it boasted to investors and customers of the iconic brand. The chief guardian of that image, CEO Wendelin Wiedeking, agreed last month to step down from his post after 16 years. Wiedeking, the highest paid CEO in Western Europe, took the fall, following three years of trying to engineer a takeover of Volkswagen by Porsche through a derivative scheme that fell apart and left the company with more than $14 billion of debt to service.
Officials from both companies said the combined company would eventually overtake Toyota, the world’s biggest automaker, in sales and profitability.
“Volkswagen’s solid financial base and Porsche’s independence will be preserved,” VW’s statement said.
“That is what they are saying, but the fact is that Porsche is forever changed this week,” says Los Angeles-Based marketing consultant Dennis Keene. “It isn’t likely that Porsche fanatics will detect any loss of integrity in the vehicles, because the VW management and families controlling the company’s destiny are devoted to the brand, but the company is no longer independent.”
Poetsch said the exact capital position of the families in the new company would depend on specific criteria which would be reviewed during the process of the merger. Porsche AG is currently VW’s biggest shareholder with about 52 percent.
Porsche will become VW’s tenth brand in its portfolio, along with Audi, Bentley and Skoda. VW is also a major shareholder in two of the continent’s biggest truck makers: Scania AB of Sweden and MAN SE of Germany.
Shares of VW fell more than 15 percent on the news to euro191.72 while shares of Porsche Automobil Holding SE rose more than 10 percent to euro49.19 in Frankfurt afternoon trading.
Porsche is losing its independence the same week it is launching its newest, most controversial product in many years in its most important market. The Porsche Panamera, the company’s first sedan, has been unveiled at this week’s annual Concourse d’Elegance car show in Pebble Beach, Ca.
“This is the perfect stage to roll out this extraordinary car,” said Detlev von Platen, President and CEO, Porsche Cars North America. “Everywhere you look there is a spectacular California backdrop and the entire week is devoted to thousands of auto enthusiasts celebrating the beauty of classic automobiles, both new and old.”
The Panamera Gran Turismo will go on sale at the brand’s 202 U.S. dealers on October 17, 2009.
“First and foremost, the Panamera is a true Porsche,” said von Platen. “It is a race bred car that you can now share with three other people in incredible comfort and class.”
The Panamera has the engine in the front, like most sedans. Porsche is known for rear-mounted engines in its cars. It has been built on an all-new engineering platform, and is powered by a 400-horsepower 4.8-liter V8 in base models, a 500-hp version in the Panamera Turbo. The price range for the car is from $89,800 to more than $132,000.
The sedan was the brain-child of Wiedeking, though it is hard to say iof Volkswagen would have seen the value in developing a Porsche sedan given the fact that VW sells competititors to the Panamera from its Audi and Bentley showrooms.
Driving impressions of the car haven’t been logged yet by the leading auto testing magazines. But one criticism of the design so far is a bulbous back end roof-line, which were specifically designed to create a comfortable rear-seat space for full-sized adults.